Abbott Pakistan–steady and sound

While most pharmaceutical companies in Pakistan are finding themselves in deep waters, Abbot Laboratories Pakistan seems to have the ability to buck the trend.
Last year in CY13, the pharmaceutical company was able to keep its input and raw material costs under check, which resulted in a significant stride in gross margins. Similarly, 100 basis points increases in net margins, and a 21 percent year-on-year increase in profit after tax, were a treat for the company trying to survive the tough pharmaceutical fundamentals like price freeze and stringent regulatory framework.
The firm’s performance in CY14 so far has also been a reassuring one. During the first six months of 2014, Abbott’s net sales posted a decent growth of around 13 percent year on year. While gross margins had improved to 39 percent in 1Q CY14 versus 1Q CY13 due to favourable product mix and reduction in prices of certain raw materials, higher cost of sales and services during the second quarter of CY14 affected the overall gross margins of the company in 1H CY14.
The firm’s bottom line in 1H CY14 witnessed a reasonable growth of 16.5 percent, helped in part by a year improvement in net margins on account of slight fall in other non-operating charges but mostly because of the doubling of other income.
While Abbott Pakistan is at a better position than other pharmaceutical companies in the country, there is no denying that the firm’s operations continue to be affected by the unsatisfactory dynamics of local industry. And any progress like devising a new pricing policy would definitely be more than appreciated by the company.

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Abbott Laboratories (Pakistan) Limited

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Rs (mn)             1HCY14   1HCY13      YoY   2QCY14   2QCY13      YoY

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Domestic             8,971    7,921    13.3%    4,667    4,218    10.6%

Exports                362      294    23.1%      218      162    34.3%

Net sales            9,333    8,215    13.6%    4,885    4,380    11.5%

Gross profit         3,530    3,169    11.4%    1,817    1,766     2.9%

Dist. & Markt exp    1,387    1,224    13.4%      707      639    10.7%

PBT                  2,015    1,709    17.9%    1,018      996     2.2%

Taxation               688      569    20.8%      321      316     1.5%

PAT                  1,328    1,140    16.5%      698      680     2.6%

EPS (Rs/share)       13.56    11.64    16.5%     7.13     6.95     2.6%

Gross margin         37.8%    38.6%             37.2%    40.3%

Net margin           14.2%    13.9%             14.3%    15.5%

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